RESEARCH AND DEVELOPMENT AGREEMENT
BETWEEN
AGRITOPE, INC.,
AND
VILMORIN & CIE
Dated December 5, 1997
TABLE OF CONTENTS
-----------------
SECTION PAGE
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1. Definitions............................................................................................ 1
2. Advisory Groups........................................................................................ 3
2.1 Project Advisory Committee.................................................................... 3
2.2 Scientific Advisory Board..................................................................... 4
3. Annual Project Selection............................................................................... 4
4. Selection of Projects at Other Times................................................................... 5
5. Preferred Access; Scope................................................................................ 5
5.1 Right of First Refusal; Failure to Submit Project............................................. 5
5.2 Remedy for Breach............................................................................. 6
5.3 Tomatoes Excluded............................................................................. 6
6. Project Funding........................................................................................ 6
6.1 Amount........................................................................................ 6
6.2 Payment....................................................................................... 6
6.3 Decision Not to Fund.......................................................................... 6
6.4 Minimum Funding............................................................................... 7
7. Conduct of Research.................................................................................... 7
7.1 Location...................................................................................... 7
7.2 Exchange of Technical Information............................................................. 7
7.3 Staffing...................................................................................... 7
7.4 Progress Reports; Research Results............................................................ 8
7.5 Termination................................................................................... 8
8. Ownership and Marketing Rights......................................................................... 8
8.1 Technology; No Transfer....................................................................... 8
8.2 Research License.............................................................................. 8
8.3 Projects that Utilize Agritope Technology, Research Expertise
and Facilities................................................................................ 8
8.4 Baseball Arbitration.......................................................................... 10
8.5 Projects that Utilize Vilmorin Technology and Agritope's Research
Expertise and Facilities...................................................................... 10
8.6 Projects That Utilize Both Agritope Technology and Vilmorin
Technology.................................................................................... 11
8.7 Completion of Defaulted Research Project...................................................... 11
8.8 Most Favored Customer......................................................................... 12
8.9 Access to Technology and Personnel............................................................ 12
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9. Licenses............................................................................................... 12
9.1 Calculation of Royalties...................................................................... 12
9.2 Royalty Payments.............................................................................. 13
9.3 Reports and Records........................................................................... 14
9.4 Audits........................................................................................ 14
9.5 License to Improvements....................................................................... 15
9.6 Sublicenses................................................................................... 15
10. Patents................................................................................................ 15
10.1 Patents to Agritope Technology................................................................ 15
10.2 Patents for New Technology.................................................................... 15
10.3 Patents for Modified Crops.................................................................... 16
10.4 Status of Patent Applications................................................................. 16
10.5 Patent Maintenance............................................................................ 16
10.6 Election Not to Prosecute or Maintain......................................................... 16
10.7 Patent Costs.................................................................................. 16
11. Infringement by Others................................................................................. 17
11.1 Notice of Infringement........................................................................ 17
11.2 Cooperation................................................................................... 17
12. Representations and Warranties of Agritope............................................................. 17
12.1 Authority..................................................................................... 17
12.2 Ownership..................................................................................... 17
12.3 Noninfringement............................................................................... 17
13. Representations and Warranties of Vilmorin............................................................. 18
13.1 Authority..................................................................................... 18
13.2 Ownership..................................................................................... 18
13.3 Noninfringement............................................................................... 18
14. Covenants of Agritope and Vilmorin..................................................................... 18
14.1 Commercially Reasonable Efforts............................................................... 18
14.2 Marking of Products........................................................................... 18
14.3 Insurance..................................................................................... 18
14.4 Taxes......................................................................................... 19
14.5 Government Approvals.......................................................................... 19
15. Conditions to Effectiveness............................................................................ 19
16. Indemnification........................................................................................ 19
16.1 Indemnification by Agritope................................................................... 19
16.2 Indemnification by Vilmorin................................................................... 19
16.3 Patent Indemnification........................................................................ 20
16.4 Insurance Proceeds............................................................................ 20
16.5 Procedure for Indemnification................................................................. 20
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16.6 Other Claims.................................................................................. 22
16.7 No Beneficiaries.............................................................................. 23
17. Confidentiality........................................................................................ 23
17.1 Confidentiality Obligation.................................................................... 23
17.2 Use........................................................................................... 23
17.3 Return........................................................................................ 23
17.4 Scope......................................................................................... 23
17.5 Required Disclosure........................................................................... 23
17.6 Patent Applications........................................................................... 24
17.7 Enforcement................................................................................... 24
18. Public Announcements................................................................................... 24
18.1 Scientific Publications....................................................................... 24
18.2 Terms of Agreements........................................................................... 24
19. Term and Termination................................................................................... 24
19.1 Term.......................................................................................... 24
19.2 Termination by Vilmorin....................................................................... 25
19.3 Termination by Agritope....................................................................... 25
19.4 Effect........................................................................................ 25
20. Baseball Arbitration Procedure......................................................................... 25
20.1 Parties....................................................................................... 25
20.2 Proposals..................................................................................... 25
20.3 Decision...................................................................................... 26
20.4 Rules......................................................................................... 26
20.5 Mediation; Process............................................................................ 26
21. Miscellaneous.......................................................................................... 26
21.1 No Agency..................................................................................... 26
21.2 Hiring of Employees........................................................................... 26
21.3 Agreements with Third Parties................................................................. 26
21.4 Cooperation; Additional Documents............................................................. 26
21.5 Notices....................................................................................... 27
21.6 Governing Law................................................................................. 27
21.7 Assignment.................................................................................... 27
21.8 Entire Agreement.............................................................................. 27
21.9 Attorney Fees................................................................................. 27
21.10 Arbitration................................................................................... 27
21.11 Severability.................................................................................. 28
21.12 Force Majeure................................................................................. 28
21.13 Captions...................................................................................... 29
21.14 Modification and Waiver....................................................................... 29
EXHIBIT A PLANT SPECIES
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RESEARCH AND DEVELOPMENT AGREEMENT
BETWEEN
AGRITOPE, INC. ("Agritope")
0000 XX Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000-0000
X.X.X.
Tel: (000) 000-0000
Fax: (000) 000-0000
and VILMORIN & CIE ("Vilmorin")
00, xxx xx Xxxxxxxxx
00000 Xxxxx
Xxxxxx
Tel: (00) 000 00 00 00
Fax: (00) 000 00 00 00
BACKGROUND AND OBJECTIVES
A. Agritope owns certain molecular genetic technology and know-how that
can be applied to multiple crops. Vilmorin owns certain proprietary germplasm
that may benefit from application of Agritope's technology and know-how.
Vilmorin wishes to have Agritope carry out research and development projects
with the goal of transforming Vilmorin's germplasm to confer commercially
desirable characteristics.
B. This Agreement sets forth the terms and conditions under which the
parties will enter into agreements for specific research and development
projects. The research is a preliminary step towards possible commercialization
of the transformed germplasm developed under the terms of this Agreement.
C. Concurrently with the execution of this Agreement, Agritope and
Vilmorin are entering into a stock purchase agreement (the "Stock Purchase
Agreement"), pursuant to which Vilmorin has agreed to purchase shares of
Agritope capital stock upon the terms and conditions set forth therein.
AGREEMENT
Agritope and Vilmorin agree as follows:
1. Definitions. Capitalized terms used but not defined elsewhere in
this Agreement shall have the meanings assigned to them in this Section 1.
"Affiliates" means persons or entities directly or indirectly,
through one or more intermediaries, controlling, controlled by, or
under common control with the specified entity.
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"Agritope Technology" means Technology owned by Agritope or
licensed to Agritope by third parties with authority to use it as
contemplated by this Agreement.
"Competing Modified Crop" means, when used in reference to a
Crop or Modified Crop, a genetically altered version of germplasm owned
by a third party for the same plant species as the referenced Crop or
Modified Crop.
"Crop" means each vegetable and flower plant species listed on
Exhibit A. Vilmorin may add a Crop to Exhibit A by notice to Agritope
if Vilmorin either has newly commenced marketing of that Crop or has
undertaken actions intended to lead to Vilmorin's marketing of that
Crop, provided that Agritope has not previously entered into an
agreement or commitment with a third party that would be violated by
such addition.
"Field of Use" means with respect to Vilmorin the Crops listed
on Exhibit A and with respect to Agritope everything else.
"Indemnifiable Losses" means, with respect to any claim by an
Indemnitee for indemnification under Section 16 hereof, any and all
losses, liabilities, costs and expenses (including, without limitation,
the costs and expenses of any and all actions, demands, assessments,
judgments, settlements and compromises relating thereto and reasonable
attorney fees and expenses in connection therewith, including attorney
fees before and at trial and in connection with any appeal or petition
for review) suffered by such Indemnitee with respect to such claim.
"Indemnifying Party" means any party required to pay any other
person pursuant to Section 16 hereof.
"Indemnitee" means any party who is entitled to receive
payment from an Indemnifying Party pursuant to Section 16 hereof.
"Indemnity Payment" means the amount an Indemnifying Party is
required to pay an Indemnitee pursuant to Section 16 hereof.
"Insurance Proceeds" means those monies (i) received by an
insured from an insurance carrier or (ii) paid by an insurance carrier
on behalf of the insured, in either case net of any applicable premium
adjustment, retrospectively rated premium, deductible, retention, cost
or reserve paid or held by or for the benefit of such insured.
"Modified Crop" means the genetically altered version of a
Crop that results from a Research Project.
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"New Technology" means any Technology resulting from Research
Projects carried out by Agritope with the funding of Vilmorin as
contemplated by this Agreement, but excluding Modified Crops. New
Technology does not include Technology that is or becomes available to
the public on a royalty-free basis.
"Patent" means a patent, supplemental protection certificate,
plant variety protection certificate, or similar right to exclude
others from making, using, or selling the relevant invention, plant or
genetic material.
"Research Products" means commercially marketable Technology
or other results from Research Projects carried out by Agritope with
the funding of Vilmorin as contemplated by this Agreement, including
(without limitation) gene constructs, gene sequences and markers, and
promoters, but excluding Modified Crops. Research Products does not
include Technology or results that are or become available to the
public on a royalty-free basis.
"Research Project" means each research and development project
performed by Agritope with funding from Vilmorin.
"Technology" means all proprietary DNA sequences, genes,
promoters, gene constructs, and genetic transformation systems and
techniques, inventions and know-how that may be utilized in plant
genetic, plant biological or agricultural research or production
activities or otherwise.
"Trade Secrets" means all confidential information owned by
any party relating to the use or production of Technology. Confidential
information of one party ("Disclosing Party") shall no longer
constitute Trade Secrets when it (i) becomes publicly known without
fault of the other party or its Affiliates, (ii) is or has been
received in good faith by the other party without restriction on use or
disclosure from a third party having no obligation of confidentiality
to Disclosing Party; or (iii) is or has been independently developed by
the other party without reference to Confidential Information received
from Disclosing Party, as evidenced by the other party's written
records.
"Vilmorin Technology" means Technology owned by Vilmorin or
licensed to Vilmorin by third parties with authority to use it as
contemplated by this Agreement.
2. Advisory Groups.
2.1 Project Advisory Committee. Agritope shall establish a
Project Advisory Committee consisting of up to four members, two of whom shall
be designated by Vilmorin. The purpose of the Project Advisory Committee shall
be to make advisory recommendations to Agritope regarding Research Projects to
be conducted by Agritope and funded by Vilmorin.
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2.2 Scientific Advisory Board. In addition to the Project
Advisory Committee, Vilmorin shall be entitled to name one scientist to sit on
the Agritope Scientific Advisory Board as its representative.
3. Annual Project Selection. On an annual basis, Agritope shall decide
which research projects it would like to conduct and Vilmorin shall decide which
research projects it would like to have conducted by Agritope. The principal
steps of the annual project selection process, and the deadlines by which they
are to be completed, are outlined below:
Date Action
---- ------
May 1 Agritope and Vilmorin each submit proposed annual
Research Projects to the Project Advisory Committee.
Research Project proposals submitted by Agritope and
Vilmorin to the Project Advisory Committee shall
disclose each proposed project in sufficient detail
to enable the Project Advisory Committee to evaluate
the different projects and to offer suggestions and
proposals. The description of each project shall
include, without limitation, the identification of
the Crop or Crops to be modified, the Technology to
be used, the intended technical result of the
project, the estimated duration of the project, the
principal contract terms of the project if not
specified in this Agreement, the general parameters
of the commercialization agreement, to the extent
practicable, and such other information as may be
reasonably requested by the Project Advisory
Committee. Agritope also submits a budget of
anticipated costs of each project it proposes.
June 1 Agritope submits to the Project Advisory Committee a
budget of anticipated costs of each project proposed
by Vilmorin.
June 15 The Project Advisory Committee makes its
recommendation to Vilmorin and Agritope as to
Research Projects it believes should be conducted and
funded during the next fiscal year.
August 15 Vilmorin provides Agritope with its decision on which
projects it would like to fund.
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September 1 Agritope in good faith, with input from Vilmorin,
decides which projects it will undertake and notifies
Vilmorin. The project proposal for a Research
Project, as accepted by the parties, shall constitute
the Research Project agreement between the parties
with respect to such Research Project. Agritope will
make commercially reasonable efforts to conduct all
Research Projects selected for full funding by
Vilmorin, subject to negotiation of the parties'
respective rights with respect to each project.
October 1 Beginning of fiscal year; Agritope initiates selected
Research Projects.
4. Selection of Projects at Other Times. If Agritope or Vilmorin wish
to conduct a Research Project that has not been previously proposed to the
Project Advisory Committee, or wishes to modify a research project that has been
recommended by the Project Advisory Committee, it may at any time submit the new
or modified project proposal to the Project Advisory Committee. The principal
steps that the parties shall take, and the deadlines by which they are to be
completed, are outlined below:
Days Before
Beginning Project Action
----------------- ------
60 Agritope or Vilmorin submit proposed Research
Project and budget to Project Advisory Committee.
The description of each project shall include the
information required for projects proposed under
Section 3.
30 Project Advisory Committee provides Agritope and
Vilmorin with its recommendation. Within 10 days
thereafter, Vilmorin provides Agritope with its
funding decision.
15 Agritope, with input from Vilmorin, decides in
good faith whether to proceed with the proposed
project or modification and notifies Vilmorin. The
project proposal, as accepted by the parties,
shall constitute the Research Project agreement.
0 Agritope initiates Research Project.
5. Preferred Access; Scope.
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5.1 Right of First Refusal; Failure to Submit Project.
Vilmorin shall have a right of first refusal to fund and participate in any
research project by Agritope involving the genetic alteration of a Crop.
Specifically, Agritope shall not undertake any project involving genetic
alteration of a Crop (other than projects begun or committed as of the date of
this Agreement), unless Agritope has first offered the research project to
Vilmorin, whether or not proposed in accordance with the project selection
procedure described above. If Agritope breaches this obligation, upon learning
of the breach Vilmorin shall have the further right to pay the costs incurred to
date with respect to the project and to assume future project costs, in which
event Vilmorin shall have the same rights with respect to the project as if it
had participated in the project from its inception.
5.2 Remedy for Breach. As a contractual remedy,
notwithstanding 5.1, if Agritope engages in a research project with a third
party in breach of Vilmorin's right of first refusal, and if Vilmorin elects to
take over the project once having learned of it, the third party's rights shall
be canceled as part of the remedial actions taken in connection with Vilmorin's
assumption of the project. In furtherance thereof, Vilmorin shall be entitled to
an equitable remedy in the nature of a mandatory injunction or specific
performance to enforce its rights. Agritope alone shall be responsible for any
damages to any such third party as a result of such cancellation; the cost of
any such damages shall not be included in Agritope's overhead or costs for any
Research Project.
5.3 Tomatoes Excluded. Projects involving tomatoes shall be
excluded from this Agreement and any commercialization agreement between the
parties to the extent that, and in geographical areas where, third parties have
already acquired rights with respect to tomatoes at the date of this Agreement.
6. Project Funding.
6.1 Amount. Unless otherwise agreed, the funding required for
each Research Project shall consist of all out-of-pocket expenses incurred by
Agritope in performing the Research Project, including but not limited to
employee salaries, payroll taxes, and employee benefit costs, costs of
materials, services and supplies, and overhead computed in accordance with
Agritope's usual accounting procedures. The specific terms under which Vilmorin
will fund a project may include annual and/or aggregate dollar limits on its
funding obligations.
6.2 Payment. Except as otherwise agreed by the parties with
respect to any specific project, payments by Vilmorin shall be made within 30
days after receipt from Agritope of a detailed quarterly statement for each
active Research Project setting forth the funds received to date for the
project, the costs incurred to date, and the projected funding requirements for
the next quarter.
6.3 Decision Not to Fund. If Vilmorin elects not to fund a
specific project proposed by Agritope, Agritope may negotiate with third parties
to fund the project on comparable terms or may conduct the project itself
without third-party funding. If Agritope
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elects not to conduct a project that Vilmorin offered to fund, Vilmorin may
enter into agreements with third parties for the project or may conduct the
project itself.
6.4 Minimum Funding. Agritope has granted Vilmorin an option
to purchase up to 785,715 shares of Agritope Series A Preferred Stock at a price
of $7 per share for an aggregate purchase price of $5,500,005. If Vilmorin does
not exercise the option in full, Vilmorin shall be obligated to fund Research
Projects in an amount equal to the difference between $5,500,005 and the actual
aggregate purchase price paid for the shares purchased pursuant to the exercise
of the option, provided, however, that Vilmorin shall not be required to pay
more than $1 million under this Section 6.4. Vilmorin's minimum funding
obligation will be made over a three-year period, commencing on January 1, 1998,
and will be applied to fund Research Projects selected by the parties and
approved for funding in accordance with the selection procedure described above.
The payment described in this section is a minimum funding commitment by
Vilmorin, and is not intended to limit decisions by Vilmorin to fund additional
Research Projects.
7. Conduct of Research.
7.1 Location. Unless otherwise agreed, each Research Project
shall be performed at Agritope's facilities.
7.2 Exchange of Technical Information. Agritope and Vilmorin
shall each make available to the other such technical information as may be
useful to facilitate each Research Project and commercialization of the
resulting Modified Crop, New Technology, or Research Products. Without
limitation, each party shall provide to the other such written information
regarding its Technology related to the Research Project as the other party may
reasonably request, provided the information is available or can be obtained
without unreasonable expense. Each party shall make its personnel who are
involved in a Research Project reasonably available during normal business hours
for consultation by telephone with the other party. In addition, each party
shall allow scientists or other appropriate personnel of the other party to
visit and have access to the first party's laboratories and other facilities, in
order to facilitate the exchange of such information. Reasonable travel costs
incurred by Agritope personnel to visit Vilmorin's facilities shall be
considered costs of the Research Project, which shall be borne by the parties in
the same manner as other costs of the Research Project. Similarly, travel costs
of Vilmorin's personnel incurred at Agritope's request shall be considered costs
of the Research Project. The obligations set forth in this Section 7.2 shall
expire upon completion of the applicable Research Project. Business class air
fare and actual costs for meals and incidentals shall be considered reasonable.
7.3 Staffing. Agritope shall utilize its own staff, whenever
possible, to accomplish its tasks in connection with each Research Project.
Agritope shall use reasonable efforts to make qualified personnel available to
work on the Research Project. Agritope may elect to hire additional qualified
personnel but shall not be required to do so. If Agritope uses outside
contractors or free-xxxxx researchers, it shall notify Vilmorin, who shall have
the
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right to disapprove or reject any such contractor or free-xxxxx researcher for
projects funded by Vilmorin, in whole or in part.
7.4 Progress Reports; Research Results. Agritope shall provide
Vilmorin with reports describing the status of Agritope's activities and results
of research tasks conducted as part of each Research Project. Routine progress
reports shall be made quarterly or at other mutually agreed intervals.
Significant developments shall be reported as they occur.
7.5 Termination. If Vilmorin reasonably determines that
progress on a Research Project is unsatisfactory, it may elect to terminate its
participation in the Research Project on not less than 180 days' prior written
notice. If the parties agree to a modified or substitute Research Project under
Section 4 in place of an on-going Research Project, then the on-going Research
Project itself may be terminated in connection with such arrangement by mutual
agreement of the parties. Agritope and Vilmorin shall negotiate in good faith
the terms of any such termination.
8. Ownership and Marketing Rights.
8.1 Technology; No Transfer. Unless otherwise agreed with
respect to a particular Research Project, Vilmorin and Agritope shall jointly
own and have equal interests and rights in and to any New Technology and any
Research Products, provided, however, unless otherwise agreed, the right of each
party to market and commercialize New Technology or Research Products shall be
limited to such party's Field of Use. Notwithstanding the previous sentence, if
a party offers to the other party the right to participate in research projects
applying the New Technology or Research Products to a specified crop within the
other party's Field of Use and the other party elects not to participate, the
offering party may market and commercialize the specified crop incorporating the
New Technology or Research Products even though it is not within the offering
party's Field of Use. Nothing in this Agreement transfers ownership of a party's
existing Technology to any other party. Nothing in the Agreement transfers
ownership of any of Vilmorin's Crops to Agritope.
8.2 Research License. Vilmorin shall grant to Agritope a
royalty-free nonexclusive license to use its Crops and Vilmorin Technology in
connection with a Research Project solely for purposes of conducting the
research contemplated by such Research Project. No party shall make any
commercial use of any other's Crops or Technology except as permitted by this or
another written agreement.
8.3 Projects that Utilize Agritope Technology, Research
Expertise and Facilities. This Section 8.3 applies to Research Projects in which
Agritope utilizes only Agritope Technology and Agritope's research expertise and
facilities to modify Vilmorin's Crop (for example, a Research Project in which
Agritope's SAMase gene and promoters are inserted in Vilmorin's melon germplasm
to produce modified melons).
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8.3.1 Technology Rights. Unless otherwise agreed,
Agritope and Vilmorin will jointly own any New Technology and any
Research Products developed in the course of the Research Project, and
Vilmorin will own the Modified Crop(s). Vilmorin will have the right to
market Modified Crops pursuant to the terms of a commercialization
agreement between Vilmorin and Agritope, which shall include an
obligation to pay royalties or equivalent compensation to Agritope.
8.3.2 Commercialization Agreement. Either prior to,
or at any time during the course of, a Research Project, Vilmorin and
Agritope will negotiate in good faith the terms of a commercialization
agreement. The commercialization agreement will address marketing of
the Modified Crop and compensation of Agritope and Vilmorin. Agritope's
compensation may consist of royalties on seed sales, royalties on sales
of mature crops, royalties based on savings realized by farmers
utilizing the Modified Crops or other mechanisms agreed upon by the
parties.
8.3.3 Exclusive Marketing Rights. If exclusive
marketing rights under the commercialization agreement are desired by
Vilmorin, then Vilmorin will provide to Agritope a marketing plan,
describing Vilmorin's current market share of the Crop and projected
market share for the Modified Crop, both on a geographical basis. Based
on this information, Vilmorin and Agritope will negotiate in good faith
to determine geographical regions (e.g., worldwide, Europe, North
America, or France) in which Vilmorin shall have exclusive or
nonexclusive marketing rights. Agritope shall give Vilmorin exclusivity
in geographical regions where Vilmorin demonstrates a strong likelihood
of obtaining a substantial market share. Any exclusive marketing rights
granted by Agritope to Vilmorin pursuant to this Section 8.3.3 for a
particular geographical region shall become nonexclusive in the event
that Vilmorin does not achieve and maintain a substantial market share
in such geographical region. The definition of "substantial market
share" shall be negotiated in good faith by the parties on a
case-by-case basis for each Modified Crop and shall be included in the
relevant commercialization agreement. For any period during which the
commercialization agreement gives Vilmorin exclusive marketing rights
for a Modified Crop in a region, Agritope will not enter into an
agreement with a third party permitting the marketing of a Competing
Modified Crop in that region.
8.3.4 Lead Time. In addition to any marketing rights
granted in a commercialization agreement pursuant to Section 8.3.3, for
a period of 24 months following the effective date of applicable
regulatory approval for sale of a Modified Crop in the markets
contemplated in the relevant commercialization agreement, Agritope will
not permit the sale by any third party of any Competing Modified Crop.
Thereafter, Agritope may sell or allow such sales by any third party
without restriction in those geographic
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regions in which Vilmorin does not have exclusive marketing rights for
the Modified Crop pursuant to Section 8.3.3. If, however, a mutually
acceptable commercialization agreement has not been negotiated and
executed by the parties upon the effective date of such approval,
Agritope may enter into an agreement with any third party regarding the
commercialization of Competing Modified Crops.
8.3.5 Election Not to Market. If at any time after
the execution of a commercialization agreement between Agritope and
Vilmorin regarding a Modified Crop, Vilmorin elects not to market or
continue to market the Modified Crop in a particular country,
Vilmorin's rights under the commercialization agreement to market in
that country shall cease and Agritope may market or may enter into an
agreement with any third party regarding the marketing of any Competing
Modified Crop in that country.
8.4 Baseball Arbitration. If, in connection with the
negotiation of a commercialization agreement, the parties are not in agreement
on all the terms, including (without limitation) geographical regions of
exclusivity, royalty rates, or other quantifiable terms, then the provisions of
the commercialization agreement as to such terms shall be determined by
mediation or by binding "baseball" arbitration in accordance with Section 20.
8.5 Projects that Utilize Vilmorin Technology and Agritope's
Research Expertise and Facilities. This Section 8.5 applies to Research Projects
in which Agritope utilizes Vilmorin's Technology and Agritope's research
expertise, Trade Secrets or know-how, and facilities to modify Vilmorin's Crop.
8.5.1 Technology Rights. Unless otherwise agreed as
provided in Section 8.1, Agritope and Vilmorin will jointly own any New
Technology and any Research Products developed in the course of the
Research Project, and Vilmorin will own the Modified Crop(s). Vilmorin
will have the right to market such Modified Crops on the terms of a
commercialization agreement between Agritope and Vilmorin, including an
obligation to pay royalties to Agritope under the commercialization
agreement.
8.5.2 Commercialization Agreement and Exclusive
Marketing Rights. The parties will negotiate in good faith the terms of
a commercialization agreement and exclusive marketing rights for any
Modified Crops resulting from Research Projects under this Section 8.5
in the same manner as provided in Sections 8.3.2 and 8.3.3, the terms
of which are hereby incorporated by reference, mutatis mutandis.
8.5.3 Lead Time, Election Not to Market and Baseball
Arbitration. The provisions of Sections 8.3.4, 8.3.5 and 8.4,
respectively, the terms of which are hereby incorporated by reference,
mutatis mutandis, shall
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apply to commercialization agreements and marketing rights under this
Section 8.5.
8.6 Projects That Utilize Both Agritope Technology and
Vilmorin Technology or New Technology. If a Research Project shall involve the
use of both Agritope Technology and Vilmorin Technology or New Technology, the
parties shall negotiate in good faith the terms of a commercialization agreement
and exclusive marketing rights for the Modified Crops as provided in Sections
8.3.2 and 8.3.3, mutatis mutandis, provided that in negotiating such terms the
parties will take into consideration the contribution of Vilmorin Technology to
the Research Project. The lead time, election not to market and baseball
arbitration provisions of Sections 8.3.4, 8.3.5 and 8.4, respectively, mutatis
mutandis, shall apply to any such commercialization agreements and marketing
rights.
8.7 Completion of Defaulted Research Project.
8.7.1 If Agritope shall be in default under the terms
of a Research Project agreement and shall fail to have cured such
default within 30 days after notice from Vilmorin (or if cure cannot be
accomplished within 30 days, shall fail to commence cure within 30 days
of such notice and thereafter diligently and continuously work to
accomplish cure as soon as possible), then Vilmorin shall have the
following remedies:
(a) It may terminate the Research Project pursuant to
the terms of Section 19.2; or
(b) It may extend the time for Agritope's performance
of such Research Project, with an appropriate suspension or
modification of Vilmorin's funding obligations until Agritope
has cured the default; or
(c) It may assume performance of the balance of the
Research Project at its expense. If Vilmorin assumes such
performance obligation, (i) it may, with the consent of
Agritope, which consent shall not be unreasonably withheld,
employ the employees or contractors of Agritope who have been
working on the Research Project for the purpose of completing
the Research Project, (ii) it shall be given access to, and
copies of, all research materials obtained or assembled by
Agritope for such Research Project, or prepared in connection
with the work performed by Agritope on the Research Project
prior to its default and (iii) it shall have the license and
right to use all relevant Agritope Technology reasonably
needed for completion of the Research Project.
8.7.2 Upon Vilmorin completing any Research Project
under this Section 8.7, the rights of the parties with respect to any
New Technology or Modified Crops shall be as set forth in 8.1. The
marketing of the Modified
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Crop obtained as a result shall be on the terms of the
commercialization agreement and marketing rights negotiated by the
parties under Sections 8.3, 8.5, or 8.6, as the case may be, provided
Vilmorin shall be entitled to deduct from any royalties payable to
Agritope the excess of reasonable costs incurred by Vilmorin in order
to complete the Research Project, as compared to the funding Vilmorin
would have made under the Research Project if Agritope had not
defaulted.
8.8 Most Favored Customer. During the term of this Agreement,
it is Agritope's intention to deal with Vilmorin under this Agreement, Research
Project agreements, and commercialization agreements entered into in the future
pursuant to this Agreement as a most favored customer. Specifically, if Agritope
has entered into an agreement with a third party regarding Technology to be
applied to or commercialization of a Crop, and Agritope has previously entered
into or subsequently enters into a Research Project agreement or
commercialization agreement with Vilmorin (pursuant to this Agreement) for the
same Crop, everything else being equal (taking into account factors including,
without limitation, the nature of the Technology, the geographic market, and the
project goals), Vilmorin will be offered the same terms offered to the third
party. In all events, during the term of this Agreement, Agritope will have a
continuing obligation to deal with Vilmorin in good faith with regard to
Research Projects for a Crop and the marketing of a Modified Crop where the same
Crop has become the subject of a similar project or commercialization agreement
with a third party on materially different terms than the agreement to which
Vilmorin is a party, including consideration of whether any modification of the
terms of the Vilmorin agreement is appropriate under the circumstances.
8.9 Access to Technology and Personnel. In furtherance of the
purposes of this Agreement and the relationship of the parties under it, during
the term of this Agreement, each of the parties will provide the other a
reasonable right of access to its Technology and research personnel, as
requested from time to time, including (without limitation) the right to visit
the other party's facilities, to observe research operations and ask questions,
to be provided copies of documents and samples of other materials upon request,
and in general to share information; provided, however, a party may exclude from
such access material and information that is proprietary to a third party or
subject to a disclosure restriction under an agreement with a third party.
Subject to Section 7.2, each party will bear the expense of its personnel travel
and related costs in any visitations arranged under this Section 8.9.
9. Licenses. Unless otherwise agreed, the following terms and
conditions shall apply to any license granted by Agritope to Vilmorin pursuant
to this Agreement or a commercialization agreement, and to any other obligation
of Vilmorin to pay royalties to Agritope and, conversely, to any license granted
to Agritope by Vilmorin and Agritope's obligations to pay royalties.
9.1 Calculation of Royalties. Any royalty, license fee, or
equivalent compensation (collectively referred to as royalties in this Section
9) on the sale of any
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Modified Crop shall be calculated based on the method agreed to by the parties
in the applicable commercialization agreement. Any royalty on the use of
Vilmorin Technology shall be calculated on the method agreed to by the parties
in the applicable Research Project agreement. Any royalty on the
commercialization of New Technology or Research Products shall be calculated
based on the method agreed to by the parties.
9.2 Royalty Payments. Royalty payments shall be made as
follows:
9.2.1 Royalties for amounts received in any calendar
quarter shall be paid within 45 days after the end of the calendar
quarter.
9.2.2 The obligation to pay a royalty on any Modified
Crop shall extend to any Modified Crop (a) that has been manufactured
or sold or has been or will be used in a country in which a valid and
enforceable Patent exists for the Agritope Technology incorporated in
the Modified Crop, (b) that constitutes or has been produced using
Agritope Trade Secrets, or (c) that has been sold in a country in which
no third party is lawfully selling, without Agritope's permission, a
Competing Modified Crop utilizing the Agritope Technology incorporated
in the Modified Crop.
9.2.3 Agritope and Vilmorin shall each pay a royalty
to the other with respect to its commercialization of New Technology
and Research Products within or without its Field of Use; provided,
however, that the royalty payable by Vilmorin under a commercialization
agreement upon its sale of a Modified Crop incorporating New Technology
shall satisfy this royalty obligation with respect to the incorporated
New Technology. The royalty shall be at a rate mutually agreed by the
parties. If the parties are unable to agree on a royalty rate, the rate
shall be determined by binding "baseball" arbitration in accordance
with Section 20.
9.2.4 The obligation to pay royalties on any Modified
Crop shall cease on a country-by-country basis, at such time and in the
event that (a) the Patent rights held in such country for the Modified
Crop are abandoned or expire or a court of competent jurisdiction in
the country in question renders a final decision from which no appeal
is or can be taken of invalidity or unenforceability of the Patent
rights, (b) the Modified Crop no longer constitutes or is produced
using Agritope Trade Secrets, and (c) a third party begins lawfully
selling, without Agritope's permission, a Competing Modified Crop
utilizing the Agritope Technology incorporated in the Modified Crop. If
in such decision one or more claims of the Patent rights in a country
are valid and permit the Modified Crop to be sold in such country free
of infringing a third party's rights, the obligation of Vilmorin to pay
with respect to the Modified Crop covered by such claims shall not be
affected. If a third party's rights are infringed so that Modified
Crops cannot be sold in the country or countries where such third party
rights are in force, Agritope may obtain a
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license from such third party at its expense to permit Vilmorin to sell
the Modified Crops in such country or countries. If Agritope cannot or
does not obtain such a license, Vilmorin may itself attempt to obtain
such a license, but in such event Vilmorin shall be entitled to
subtract from any royalties due Agritope as a result of sales of
Modified Crops in such country or countries the amount of royalties
Vilmorin is obliged to pay such third party under its license.
9.2.5 All royalty payments shall be made in United
States Dollars ("Dollars"); provided, however, that if the proceeds of
the sales upon which such royalty payments are based are received by
Agritope or Vilmorin in a foreign currency or other form that is not
convertible or exportable in Dollars, and Agritope or Vilmorin (as the
case may be) does not have ongoing business operations or bank accounts
in the country in which the currency is not convertible or exportable,
Vilmorin or Agritope shall pay such royalties in the currency of the
country in which such sales were made by depositing such royalties in
the payee's name in a bank designated by such payee in such country.
Royalties in Dollars shall be computed by converting the royalty in the
currency of the country in which the sales were made at the exchange
rate for Dollars prevailing at the close of the last business day of
the quarter for which royalties are being calculated based upon the
applicable rate published in the Wall Street Journal (or other
comparable publication if that source is no longer available).
9.2.6 In the event the royalties set forth in the
applicable agreement are higher than the maximum royalties permitted by
the law or regulations of a particular country, the royalty payable for
sales in such country shall be equal to the maximum permitted royalty
under such law or regulations.
9.3 Reports and Records.
9.3.1 With the royalty payment for each calendar
quarter, the payor shall provide a written report to the payee with
respect to all amounts received during the quarter as to which
royalties are payable, stating the amounts thereof, showing the
calculation of royalties, and containing such other information as the
payee may reasonably request.
9.3.2 Vilmorin, Agritope, and their respective
sublicensees shall keep records adequate to verify each royalty report,
for a period of at least three years from the date of the report.
9.4 Audits. A party may, not more often than annually, request
that an audit of payor's and/or any sublicensee's records be performed by a
certified public accountant selected by the requesting party and reasonably
satisfactory to the payor, in order
- 14 -
to confirm the accuracy of payor's royalty reports, calculations, and payments.
Payor and its sublicensees shall cooperate with such an audit and shall permit
access to such records and facilities as may be requested in connection with the
audit. Payor shall pay the costs of the audit if the audit reveals underpayment
of royalties by more than 5 percent for the period covered by the audit.
Otherwise, the costs of the audit shall be borne by the requesting party.
9.5 License to Improvements. Vilmorin hereby grants Agritope a
royalty-free, nonexclusive perpetual license to make, use and sell any
improvements made by Vilmorin to Agritope's Technology in connection with any
Research Project or Modified Crop.
9.6 Sublicenses.
9.6.1 (a) Vilmorin may sublicense its rights and
interests under this Agreement in New Technology and Research Products
and under commercialization agreements for Modified Crops to any
Affiliate of Groupe Limagrain (Vilmorin's parent); provided, however,
that if any such sublicensee is divested by Groupe Limagrain so that it
is no longer an Affiliate of Groupe Limagrain, then unless Agritope
shall consent to such sublicense, the sublicense shall be terminated
effective with such divestiture. (b) Except as provided in (a),
Vilmorin may grant third parties sublicenses only with the prior
written consent of Agritope. Any approved sublicense must be reflected
in a written agreement explicitly requiring that the sublicensee comply
with Vilmorin's obligations under this Agreement and any other
agreement defining the license. Vilmorin shall supply Agritope with a
copy of each signed sublicense agreement.
9.6.2 Any sublicense shall provide that Agritope is
granted a royalty-free, nonexclusive perpetual license to make, use,
and sell any improvements made by the sublicensee to Agritope's
Technology.
9.6.3 Agritope may sublicense its rights and
interests under this Agreement in New Technology, Research Products,
and Vilmorin Technology incorporated therein to any third party only
with the prior written consent of Vilmorin, which consent shall not be
unreasonably withheld. Any approved sublicense must be reflected in a
written agreement requiring that the sublicensee comply with Agritope's
obligations under this Agreement and any other agreement defining the
license. Agritope shall supply Vilmorin with a copy of each signed
sublicense agreement.
10. Patents.
10.1 Patents to Agritope Technology. Agritope shall have the
exclusive right to obtain Patent protection for any Agritope Technology.
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10.2 Patents for New Technology. Vilmorin and Agritope shall
jointly have the right to apply for Patents for any New Technology developed in
the course of a Research Project. If either Agritope or Vilmorin elects not to
apply for such a Patent in one or more countries, the other party shall have the
right to do so in those countries at its expense. The party applying for such a
Patent shall allow the other to review the application and important prosecution
documents a reasonable time before filing them, and consider in good faith any
comments received. Each party shall cooperate with the other and shall execute
all documents reasonably requested by the other in connection with the filing
and prosecution of such Patent applications.
10.3 Patents for Modified Crops. Vilmorin shall have the first
right to apply for Patents for any Modified Crop developed in the course of a
Research Project. If Vilmorin elects not to apply for such a Patent in one or
more countries, Agritope shall have the right to do so in those countries at its
expense. The party applying for such a Patent shall allow the other to review
the application and important prosecution documents a reasonable time before
filing them, and consider in good faith any comments received. Each party shall
cooperate with the other and shall execute all documents reasonably requested by
the other in connection with the filing of such Patent applications.
10.4 Status of Patent Applications. Each party shall keep the
other reasonably informed about any Patent applications it prepares or files for
Modified Crops or New Technology resulting from a Research Project, and upon
request shall provide copies to the other party. Each shall keep the other
reasonably informed of the course of prosecution of the applications. All
information disclosed under this Section 10.4 shall be considered Confidential
Information for purposes of Section 17 until publicly disclosed.
10.5 Patent Maintenance. Except as provided below, each party
shall pay all maintenance fees and other amounts required, and take all other
action reasonably required, to keep any Patents it owns that underlie New
Technology or Modified Crops, or for New Technology or Modified Crops in full
force and effect for the maximum term.
10.6 Election Not to Prosecute or Maintain. If a party elects
not to continue to prosecute or maintain any Patent application or Patent it
holds for New Technology or Modified Crops, it shall notify the other party at
least 90 days before the deadline for taking action to prosecute or maintain the
application or Patent, and if requested by the other party, take all action
required to prosecute or maintain the application or Patent at the other party's
expense.
10.7 Patent Costs. Except as otherwise agreed, Agritope's
costs of obtaining Patents for New Technology developed in the course of a
Research Project or for Modified Crops shall be considered costs of the
corresponding Research Project and borne by the parties accordingly. Except as
otherwise agreed or provided herein, costs of maintaining issued Patents in
force shall be borne by the Patent holder.
- 16 -
11. Infringement by Others.
11.1 Notice of Infringement. If a party learns of any
infringement or threatened infringement of the other party's Patents covering
any Modified Crops, New Technology, or Research Products, that party shall
promptly give the Patent holder notice of the infringement or threatened
infringement. The Patent holder shall have the right, but not the obligation, to
institute proceedings to enjoin any such infringement or recover any damages
therefor. If the Patent holder does not institute such proceedings within 90
days after receiving notice from the other party of actual infringement of
Patents covering Modified Crops, New Technology, or Research Products, in which
such other party has an interest on account of a commercialization agreement,
such other party shall have the right to institute such proceedings at its own
expense and to retain any damages recovered.
11.2 Cooperation. Each party shall provide the other with such
information concerning any infringement of Patents for Modified Crops, New
Technology, or Research Products, as the other may reasonably request and shall
cooperate with the other in connection with any legal action or settlement
negotiations. Each party agrees to be joined as a party to infringement
proceedings properly instituted by the other for infringement of Patents for
such Modified Crops, New Technology, or Research Products, if necessary or
desirable.
12. Representations and Warranties of Agritope. Agritope represents and
warrants to Vilmorin as follows:
12.1 Authority. Agritope has full power and authority to
execute, deliver, and perform this Agreement. The provisions of this Agreement
do not conflict with any other agreement to which Agritope is a party or by
which it is bound.
12.2 Ownership. Agritope is the owner of or has the right to
use Agritope Technology. Except as disclosed in the applicable commercialization
agreement, Agritope has the right to license to Vilmorin any Agritope Technology
needed to permit Vilmorin to make, use, and sell any Modified Crop or Research
Product and to use New Technology.
12.3 Noninfringement. No claim has been asserted by any person
to the effect that the development, sale, or use of products using Agritope
Technology currently infringes any patent. To the best of Agritope's knowledge,
use of Agritope Technology in any Research Project will not infringe in any
material respect the proprietary rights of any third person.
AGRITOPE MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO AGRITOPE
TECHNOLOGY OR THE RESULTS OF ANY RESEARCH PROJECT, INCLUDING BUT NOT LIMITED TO
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
AGRITOPE DOES NOT WARRANT THE EFFICACY OR SAFETY OF ANY TECHNOLOGY OR MODIFIED
CROP PROVIDED OR LICENSED TO VILMORIN.
- 17 -
13. Representations and Warranties of Vilmorin. Vilmorin represents and
warrants to Agritope as follows:
13.1 Authority. Vilmorin has full power and authority to
execute, deliver, and perform this Agreement. The provisions of this Agreement
do not conflict with any other agreement to which Vilmorin is a party or by
which it is bound.
13.2 Ownership. Vilmorin is the owner of or has the right to
permit Agritope to use the Crops and Vilmorin Technology to be utilized in any
Research Project. Vilmorin has the right to license to Agritope any Vilmorin
Technology needed to permit Agritope to make, use, and sell any Research Product
and to use New Technology.
13.3 Noninfringement. No claim has been asserted by any person
to the effect that the development, sale, or use of its Crops or Vilmorin
Technology to be utilized in any Research Project currently infringes any
patent. To the best of Vilmorin's knowledge, use of its Crops or Vilmorin
Technology in any Research Project will not infringe in any material respect the
rights of any third person.
VILMORIN MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO VILMORIN
TECHNOLOGY OR THE RESULTS OF ANY RESEARCH PROJECT, INCLUDING BUT NOT LIMITED TO
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
VILMORIN DOES NOT WARRANT THE EFFICACY OR SAFETY OF ANY CROP PROVIDED OR
LICENSED TO AGRITOPE.
14. Covenants of Agritope and Vilmorin.
14.1 Commercially Reasonable Efforts. Vilmorin shall use
commercially reasonable efforts to further develop, market, promote, and sell
Modified Crops. Vilmorin shall bear all costs and expenses of doing so. If
either party elects not to commercialize and market any New Technology or
Research Product for a crop within its Field of Use in a particular geographic
market, then the other party shall have the right, upon reasonable notice, to
market such New Technology or Research Product for such crop in such geographic
market.
14.2 Marking of Products. Agritope and Vilmorin each shall
legibly xxxx all Modified Crops, New Technology, Research Products and other
goods incorporating or produced using Technology licensed from Agritope or
Vilmorin (or the packaging containing such goods) with a statement identifying
any patents incorporated therein or used in the production thereof and a
statement that the goods have been produced under license from Agritope or
Vilmorin. A party may omit reference to patents that have expired.
14.3 Insurance. During the term of this Agreement, Agritope
and Vilmorin each shall maintain such comprehensive general liability insurance,
including products liability insurance, with such company and containing such
provisions as shall be satisfactory
- 18 -
to the other, as will adequately insure both Agritope and Vilmorin against the
risks associated with the manufacture, sale, and use of goods incorporating or
made using Technology licensed from the other or New Technology with a loss
payable endorsement naming both parties as a beneficiary. Such policy shall
provide that the coverage thereunder shall not be terminated without at least 30
days' prior written notice to the other party. Agritope and Vilmorin shall upon
request provide the other with a certificate of insurance evidencing such
insurance coverage.
14.4 Taxes. Each party shall pay all fees, taxes, and other
charges levied upon it under applicable law by government authorities upon or in
connection with any sales or other transactions covered by this Agreement,
including without limitation taxes on sales, use, transactions, license fee
payments, or inventory, other than franchise taxes or taxes on the other party's
net income.
14.5 Government Approvals. Agritope and Vilmorin will use
commercially reasonable efforts to obtain all permits, licenses, and approvals
from government authorities necessary for the parties to sell Modified Crops,
Research Products, or other goods incorporating or made using New Technology or
Technology licensed from Agritope or Vilmorin; provided, however, that neither
Agritope nor Vilmorin shall be liable or responsible to the other due to a
failure to obtain such permits, licenses, or approvals.
15. Conditions to Effectiveness. This Agreement and the rights and
obligations of the parties set forth herein shall not become effective until the
following conditions are satisfied:
15.1 The spin-off of Agritope from Epitope, Inc. and the $9.4
million placement as disclosed in Agritope's Registration Statement on Form S-1
under Amendment No. 3 dated December 5, 1997, each shall have occurred ; and
15.2 The closing of the Stock Purchase Agreement shall have
occurred.
16. Indemnification.
16.1 Indemnification by Agritope. Agritope will indemnify,
defend and hold harmless Vilmorin and its directors, officers, employees, and
agents from and against any and all Indemnifiable Losses arising out of or due
to, directly or indirectly: (i) liabilities incurred in the course of the
business or operations of Agritope, except to the extent resulting from a breach
of Vilmorin's warranties set forth herein; and (ii) any material breach of any
warranty made in this Agreement by Agritope.
16.2 Indemnification by Vilmorin. Vilmorin will indemnify,
defend and hold harmless Agritope and each of its directors, officers,
employees, and agents from and against any and all Indemnifiable Losses arising
out of or due to, directly or indirectly: (i) liabilities incurred in the course
of the business or operations of Vilmorin, including liabilities arising out of
the commercial use of any Modified Crop, except to the extent
- 19 -
resulting from a breach of Agritope's warranties set forth herein; and (ii) any
material breach of any warranty made in this Agreement by Vilmorin.
16.3 Patent Indemnification. Agritope and Vilmorin each will
indemnify, defend and hold harmless the other, and its directors, officers,
employees and agents, from and against any and all Indemnifiable Losses arising
out of, or due to, directly or indirectly, alleged infringement of any third
party's patents or proprietary rights by the use or inclusion of Agritope
Technology or Vilmorin Technology, as the case may be, in (or in connection
with) Modified Crops, Research Products, or New Technology.
16.4 Insurance Proceeds. The amount that any Indemnifying
Party is or may be required to pay to any Indemnitee pursuant to Sections 16.1,
16.2, or 16.3 hereof will be reduced (including, without limitation,
retroactively) by any Insurance Proceeds and other amounts actually recovered by
or on behalf of such Indemnitee in reduction of the related Indemnifiable Loss.
If an Indemnitee shall have received an Indemnity Payment in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds or
other amounts in respect of such Indemnifiable Loss as specified above, then
such Indemnitee will pay to such Indemnifying Party a sum equal to the amount of
such Insurance Proceeds or other amounts actually received. Notwithstanding the
foregoing, nothing in this section grants to an Indemnitee any direct or
indirect rights or benefits to insurance coverage, nor requires an Indemnifying
Party to make any claim for insurance coverage.
16.5 Procedure for Indemnification.
16.5.1 If a party shall receive notice of any claim
or action brought, asserted, commenced or pursued by any person or
entity not a party to this Agreement (hereinafter a "Third Party
Claim"), with respect to which another party is or may be obligated to
make an Indemnity Payment, it shall give such other party prompt notice
thereof (including any pleadings relating thereto), specifying in such
reasonable detail as is known to it the nature of such Third Party
Claim and the amount or estimated amount thereof; provided, however,
that the failure of a party to give notice as provided in this Section
16.5 shall not relieve the other party of its indemnification
obligations under this Section 16, except to the extent that such other
party is actually prejudiced by such failure to give notice.
16.5.2 For any Third Party Claim concerning which
notice is required to be given, and, in fact, is given under Section
16.5.1, the Indemnifying Party shall defend in a timely manner, to the
extent permitted by law, such Third Party Claim through counsel
appointed by the Indemnifying Party and reasonably acceptable to the
Indemnitee. Once an Indemnifying Party has commenced its defense of an
Indemnitee, it cannot withdraw from such defense until conclusion of
the matter, unless the Indemnified Party agrees to the withdrawal or
the Indemnitee is also defending the claim. The
- 20 -
Indemnitee shall have the right to participate in the defense of the
Third Party Claim by employing separate counsel at its own expense.
16.5.3 If a party responds to a notice of a Third
Party Claim by denying its obligation to indemnify the other party, or
if the Indemnifying Party fails to defend in a timely or reasonably
satisfactory manner, the Indemnitee shall be entitled to defend such
Third Party Claim through counsel appointed by it. In addition, if it
is later determined that such party wrongfully denied such claim, or
the Indemnifying Party failed to defend timely or in a reasonably
satisfactory manner, then the Indemnifying Party shall (i) reimburse
the Indemnitee for all reasonable costs and expenses (including
attorney fees before and at trial and in connection with any appeal or
petition for review, but excluding salaries of officers and employees)
incurred by the Indemnitee in connection with its defense of such Third
Party Claim; and (ii) be estopped from challenging a judgment, order,
settlement, compromise, or consent judgment resolving the Third Party
Claim entered into in good faith by the Indemnitee (if such claim has
been resolved prior to the conclusion of the proceeding between the
Indemnitee and Indemnifying Party). An Indemnifying Party, after
initially rejecting a claim for defense or indemnification, may defend
and indemnify the Indemnitee, at any time prior to the resolution of
said Third Party Claim, for such claim, provided that (x) the
Indemnifying Party reimburses the Indemnitee for all reasonable costs
and expenses (including attorney fees before and at trial and in
connection with any appeal or petition for review, but excluding
salaries of officers and employees) incurred by the Indemnitee in
connection with its defense of such Third Party Claim up to the time
the Indemnifying Party assumes control of the defense of such claim
(including costs incurred in the transition of the defense from the
Indemnitee to the Indemnifying Party); and (y) the assumption of the
defense of the Third Party Claim is not expected to prejudice or cause
harm to the Indemnitee.
16.5.4 With respect to any Third Party Claim for
which indemnification has been claimed hereunder, no party shall enter
into any compromise or settlement, or consent to the entry of any
judgment which (i) does not include as a term thereof the giving by the
third party of a release to the Indemnitee from all further liability
concerning such Third Party Claim on terms no less favorable than those
obtained by the party entering into such compromise, settlement or
consent; or (ii) imposes any obligation on the Indemnitee without such
Indemnitee's written consent (such consent not to be withheld
unreasonably), except an obligation to pay money which the Indemnifying
Party has agreed to pay and has the ability to pay on behalf of the
Indemnitee. In the event that an Indemnitee enters into any such
compromise, settlement or consent without the written consent of the
Indemnifying Party (other than as contemplated by Section 16.5.3
hereof), the entry of such compromise, settlement or consent shall
relieve the Indemnifying
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Party of its indemnification obligation related to the claims
underlying such compromise, settlement or consent.
16.5.5 Upon final judgment, determination, settlement
or compromise of any Third Party Claim, and unless otherwise agreed by
the parties in writing, the Indemnifying Party shall pay promptly on
behalf of the Indemnitee, or to the Indemnitee in reimbursement of any
amount theretofore required to be paid by the Indemnitee, the amount so
determined by final judgment, determination, settlement or compromise.
Upon the payment in full by the Indemnifying Party of such amount, the
Indemnifying Party shall succeed to the rights of such Indemnitee to
the extent not waived in settlement, against the third party who made
such Third Party Claim and any other person who may have been liable to
the Indemnitee with respect to the indemnified matter.
16.5.6 In connection with defending against Third
Party Claims, the parties shall cooperate with and assist each other by
making available all employees, books, records, communications,
documents, items and matters within their knowledge, possession or
control that are necessary, appropriate or reasonably deemed relevant
with respect to defense of such claims; provided, however, that nothing
in this Section 16.5.6 shall be deemed to require the waiver of any
privilege, including the attorney-client privilege, or protection
afforded by the attorney work product doctrine. In addition, regardless
of the party actually defending a Third Party Claim for which there is
an indemnity obligation under Sections 16.1, 16.2, or 16.3 hereof, the
parties shall give each other regular status reports relating to such
action with detail sufficient to permit the other party to assert and
protect its rights and obligations under this Agreement.
16.6 Other Claims. Any claim for an Indemnifiable Loss which
does not result from a Third Party Claim shall be asserted by written notice
from the Indemnitee to the Indemnifying Party within 120 days of first learning
thereof. All such claims that are not timely asserted pursuant to this section
shall be deemed to be forever waived. The Indemnitee's written notice shall
contain such information as the Indemnitee has regarding the alleged breach.
Such Indemnifying Party shall have a period of 120 days (or such shorter time
period as may be required by law as indicated by the Indemnitee in the written
notice) within which to respond thereto. If such Indemnifying Party does not
respond within such 120-day period (or lesser period), such Indemnifying Party
shall be deemed to have accepted responsibility to make payment for the amount
of Indemnifiable Loss and shall have no further right to contest the validity of
such claim. If such Indemnifying Party does respond within such 120-day (or
lesser) period and rejects such claim in whole or in part, such Indemnitee shall
be free to pursue such remedies as may be available under applicable law or
under this Agreement.
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16.7 No Beneficiaries. Except to the extent expressly provided
otherwise in this Section 16, the indemnification provided for by this Section
16 shall not inure to the benefit of any third party or parties and shall not
relieve any insurer who would otherwise be obligated to pay any claim of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, provide any such subrogation rights with respect thereto and
each party agrees to waive such rights against the other to the fullest extent
permitted.
17. Confidentiality. Information disclosed by any party ("Disclosing
Party") to another ("Recipient") shall be protected from disclosure as follows:
17.1 Confidentiality Obligation. Recipient shall keep
confidential any nonpublic information about Disclosing Party's technology or
existing or proposed business or products ("Confidential Information") whether
written, oral, embodied in product samples, or in other forms. Recipient shall
protect Confidential Information from disclosure by using reasonable care, but
at least the same degree of care as Recipient uses to protect its own
confidential information. Recipient may disclose Confidential Information to its
employees who need to know Confidential Information in connection with this
Agreement and who agree to be bound by the restrictions imposed on Recipient by
this Section 17.1. A breach of this Section 17.1 by Recipient's employees shall
be deemed a breach by Recipient.
17.2 Use. Recipient shall not use or allow others to use
Confidential Information, except for purposes contemplated by this Agreement.
17.3 Return. At Disclosing Party's request or termination or
expiration of this Agreement, Recipient shall return all materials furnished by
Disclosing Party that contain Confidential Information, without retaining any
copies, except to the extent Recipient reasonably requires the materials in
order to perform its obligations or exercise its continuing rights under this
Agreement. Recipient may retain in its confidential files one copy of written
Confidential Information for record purposes only. Upon request, Recipient will
state in writing under oath whether it has complied with this Section 17.3.
17.4 Scope. This Section 17 shall survive termination of this
Agreement and shall remain in effect as long as Recipient possesses Confidential
Information, but shall not apply to Confidential Information that: (i) is or
becomes publicly available through no fault of Recipient; or (ii) is or has been
received in good faith by Recipient without restriction on use or disclosure
from a third party having no obligation of confidentiality to Disclosing Party;
or (iii) is or has been independently developed by Recipient without reference
to Confidential Information received from Disclosing Party, as evidenced by
Recipient's written records.
17.5 Required Disclosure. If Recipient is required by law or
judicial or administrative process to disclose Confidential Information provided
by Disclosing Party, Recipient shall promptly notify Disclosing Party and allow
Disclosing Party a reasonable time to oppose such law or process. If disclosure
is nonetheless required, Recipient may
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disclose only the Confidential Information that, in the written opinion of
counsel acceptable to Disclosing Party, Recipient is legally required to
disclose. Recipient shall use its commercially reasonable efforts to limit the
dissemination of Confidential Information that is disclosed; for example, by
obtaining the Agreement of the agency to which Confidential Information is
disclosed to treat the Confidential Information as confidential.
17.6 Patent Applications. The parties acknowledge that
Recipient may wish to disclose Confidential Information in a patent application
covering an invention by Recipient or a jointly owned invention. Disclosing
Party shall not unreasonably withhold consent to Recipient's disclosing in the
patent application such Confidential Information as Recipient is required to
disclose, in the written opinion of patent counsel acceptable to Disclosing
Party.
17.7 Enforcement. In the event of a default under this Section
17 by Recipient, Disclosing Party shall be entitled to injunctive relief in
addition to any other available remedies, including damages.
18. Public Announcements.
18.1 Scientific Publications. Subject to Section 18.2, no
party shall publish any report or make public any information about the Research
Projects without the prior written consent of the other party. Without
limitation, approval may be withheld unless the party wishing to publish or
disclose has first provided the full text of the proposed publication to the
other, obtained the other's written consent to publication, and made any changes
reasonably requested by the other.
18.2 Terms of Agreements. No party shall make a public
announcement or other disclosure of the existence or terms of this Agreement or
any other agreement between the parties, except as may be required by applicable
law. Vilmorin acknowledges that Agritope is required by law to file all material
agreements, which may include this Agreement or any other agreement between the
parties, with the Securities and Exchange Commission, and agrees that Agritope
may do so without Vilmorin's further consent.
19. Term and Termination.
19.1 Term. The term of this Agreement shall commence upon
satisfaction of the conditions set forth in Section 15 and, unless earlier
terminated as provided below, shall continue until the earlier of (i) expiration
of all Patents (and absence of all Trade Secrets) for Technology used in
Modified Crops, which Modified Crops are themselves the subject of
commercialization agreements that are in force between the parties and (ii) the
date on which Vilmorin's interest in Agritope falls below 214,285 shares of
capital stock. Such number of shares shall be appropriately adjusted to take
into account stock splits, reverse stock splits, stock dividends, or similar
recapitalization.
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19.2 Termination by Vilmorin. Vilmorin may terminate this
Agreement (a) in its entirety if Agritope defaults in its obligations and does
not cure the default within 30 days after notice, or (b) with respect to any
Research Project, if Agritope defaults in its obligations under the terms of the
Research Project agreement and does not cure the default within 30 days after
notice (or if cure cannot be accomplished within 30 days, shall fail to commence
cure within 30 days of such notice and thereafter diligently and continuously
work to accomplish cure as soon as possible). If Vilmorin terminates a Research
Project under clause (b), it shall pay Agritope for the costs incurred and
obligations assumed for the Research Project through the date of termination, as
reasonably determined and documented by Agritope.
19.3 Termination by Agritope. Agritope may terminate this
Agreement (a) in its entirety if Vilmorin defaults in its obligations and does
not cure the default within 30 days after notice, or (b) with respect to any or
all Research Projects, upon 180 days' prior written notice, if Agritope
determines, in its reasonable discretion, that further work on the Research
Project or Projects is unlikely to result in a marketable product and provides
the reasons for its determination to Vilmorin.
19.4 Effect. Termination of this Agreement shall not affect
the parties' rights and obligations under those provisions that by their terms
survive termination or are to be performed at or after termination including,
without limitation, provisions regarding ownership of Technology, royalties,
licenses, sublicensing, patents, and confidentiality. In addition, termination
of this Agreement will not affect the rights and obligations of the parties
under Research Project agreements, commercialization agreements, and other
agreements that may be entered into by the parties pursuant to the terms hereof.
The licenses and other rights to Technology, Patents, Trade Secrets, Modified
Crops or New Technology granted under this Agreement, or under Research Project
agreements or commercialization agreements entered into pursuant to the terms of
this Agreement, are intended to be intellectual property rights within the scope
of United States Bankruptcy Code Section 365(n). In the event either party
becomes a debtor subject to a proceeding under Chapter 7 or Chapter 11 of the
Bankruptcy Code, the other party shall be entitled to claim the benefit of all
protections and rights afforded by said Section 365(n) with respect to the
intellectual property rights granted to it by the debtor as licensor.
20. Baseball Arbitration Procedure. When this Agreement requires that a
matter be resolved by "baseball" arbitration, the parties shall follow the
procedures set forth in this Section 20.
20.1 Parties. The parties to the arbitration shall be Agritope
and Vilmorin.
20.2 Proposals. As part of the arbitration procedure, each of
the two parties will submit to the arbitrator its proposed terms for the
commercialization agreement or other disputed matter, including those upon which
agreement has been reached with the other party and those not agreed.
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20.3 Decision. The arbitrator shall have only the authority to
select the proposal proposed by one of the parties to the arbitration, based on
which proposal the arbitrator believes constitutes the more commercially
reasonable proposal. The arbitrator shall not have the authority to impose
additional terms or a compromise of the two parties' proposals. The parties may
amend their proposals until the arbitration hearing.
20.4 Rules. The arbitration shall be conducted in English in
accordance with the United Nations Commission on International Trade Law
Arbitration Rules as then in force and the terms of this Section 20. The
appointing authority shall be the American Arbitration Association and the
arbitration shall take place in Portland, Oregon, United States of America. The
arbitration shall be heard and determined by a single arbitrator. The parties
agree that the decision of the arbitral tribunal will be final and binding. All
notices to be given in connection with the arbitration shall be given pursuant
to Section 21.5 of this Agreement.
20.5 Mediation; Process. Before commencing an arbitration
under this Section 20, upon the request of either party the parties agree to use
mediation in an effort to resolve any differences between their proposals.
Whether mediation is requested or not, each party agrees to submit to the other
the proposal such party intends to provide to the arbitrator and, upon request
of the other party, to negotiate in good faith any proposed compromises or
adjustments in an effort to arrive at a mutually acceptable resolution. Such
negotiations may continue until a final decision is made by the arbitrator.
21. Miscellaneous.
21.1 No Agency. Nothing in this Agreement creates any
partnership, employment, or agency relationship between the parties. No party
shall have the right to act on behalf of or bind any other, and none shall take
any action that could lead a third party to believe it has the right to do so.
21.2 Hiring of Employees. Except as provided in Section 8.7,
during the term of this Agreement and for a period of one year after expiration
or termination of this Agreement, neither party nor any of its Affiliates shall
offer employment to or employ any person who was employed within the preceding
12 months by the other party, except with the prior written consent of the other
party (which shall not be unreasonably withheld if a party did not induce the
employee to leave his or her employment with the other party).
21.3 Agreements with Third Parties. This Agreement shall not
prohibit the parties from entering into agreements with third parties except as
expressly set forth herein.
21.4 Cooperation; Additional Documents. Each party shall
cooperate with the other and shall execute such additional documents as may be
necessary or desirable in order to effect or evidence the transactions
contemplated by this Agreement.
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21.5 Notices. Notices required or permitted hereunder shall be
in writing and shall be deemed given when received, when personally delivered or
sent by facsimile, five business days after being sent by registered or
certified mail, return receipt requested, or two business days after being sent
by courier service, in each case to the addresses set forth on the first page of
this Agreement or to such other address that the parties may hereafter specify
by written notice. The original of any notice sent by facsimile transmission
shall be sent promptly by registered or certified mail or overnight courier to
the recipient.
21.6 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the state of Oregon without regard to
the choice of law rules thereof, excluding the United Nations Convention on
Contracts for the International Sale of Goods.
21.7 Assignment. (a) Vilmorin may assign its rights and
interests under this Agreement in Research Products and New Technology and under
commercialization agreements for Modified Crops to any Affiliate of Groupe
Limagrain (Vilmorin's parent); provided, however, that if any such assignee
thereafter is divested by Groupe Limagrain so that it is no longer an Affiliate
of Groupe Limagrain, then unless Agritope shall consent to such assignment, the
assignment shall be terminated effective upon such divestiture. Agritope may
assign its rights and interests hereunder to any of its Affiliates. (b) Except
as provided in (a), no party may assign its rights or delegate its duties under
this Agreement without the prior written consent of the other parties. A
transfer of a controlling interest in a party shall constitute an assignment.
Any purported assignment without the other parties' consent shall be void and
shall constitute a breach of this Agreement.
21.8 Entire Agreement. This Agreement (including the attached
Exhibits) constitutes the entire agreement and understanding between the parties
with respect to its subject matter and supersedes any prior agreement or
understanding.
21.9 Attorney Fees. In the event of a default under this
Agreement, the defaulting party shall reimburse the nondefaulting party for all
costs and expenses reasonably incurred by the nondefaulting party in connection
with the default, including without limitation attorney fees.
21.10 Arbitration. Except for disputes requiring mediation or
"baseball" arbitration in accordance with Section 20, any dispute, controversy,
or claim arising out of or in connection with this Agreement, or the breach,
termination, or validity thereof, shall be settled by final and binding
arbitration conducted in English in accordance with the United Nations
Commission on International Trade Law Arbitration Rules as then in force and the
terms of this Section 21.10. The appointing authority shall be the American
Arbitration Association and the arbitration shall take place in Portland,
Oregon, United States of America. The arbitration shall be heard and determined
by a single arbitrator. The award shall be made and shall be payable in United
States Dollars, free of any tax or any other deduction. The award shall include
interest from the date of any breach or other violation of this Agreement. The
arbitrator shall also fix an appropriate rate of interest from the date of
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the breach or other violation to the date when the award is paid in full. If the
amount in controversy exceeds $10,000, the arbitrator's decision shall include a
statement specifying in reasonable detail the basis for and computation of the
award, if any. In any arbitration proceeding, each party shall be entitled to
discovery to the extent agreed upon or, in the absence of agreement, determined
by the arbitrator. In making such determination, the arbitrator shall balance
the benefits of discovery against its burdens and expenses, considering the
nature and complexity of the case, the amount in controversy, and the
possibility of unfair surprise or advantage that may result if discovery is
restricted. To the extent that discovery is allowed by the arbitrator, the
arbitrator shall have all the authority of a court incidental to such discovery
including, but not limited to, authority to order production of documents and
other materials, to issue orders to appear and submit to deposition, and to
impose appropriate sanctions against any party for failing to comply with any
order. A party substantially prevailing in the arbitration shall also be
entitled to recover such amount for its costs and attorney fees incurred in
connection with the arbitration as shall be determined by the arbitrator.
Judgment upon the arbitration award may be entered in any court having
jurisdiction. Nothing herein shall prevent any party from resorting to a court
of competent jurisdiction in those instances where injunctive relief may be
appropriate. In such instances, the prevailing party shall be entitled to
recover from the other party all reasonable attorney fees incurred at trial, on
appeal, and on any petition for review, together with such other expenses,
costs, and disbursements as may be allowed by law. The parties agree that the
award of the arbitral tribunal will be the sole and exclusive remedy between
them regarding any and all claims and counterclaims presented to the tribunal.
All notices to be given in connection with the arbitration shall be given
pursuant to Section 21.5 of this Agreement.
21.11 Severability. If in any judicial proceeding or
arbitration a court or arbitrator shall refuse to enforce all the provisions of
this Agreement, any unenforceable provisions shall be deemed eliminated from
this Agreement for the purpose of such proceeding to the extent necessary to
permit the remainder of the Agreement to be enforced in such proceeding.
21.12 Force Majeure. If the performance of any part of this
Agreement by either party, or of any obligation under this Agreement, is
prevented, restricted, interfered with or delayed by reason of any cause beyond
the reasonable control of the party liable to perform, unless conclusive
evidence to the contrary is provided, the party so affected shall, upon giving
written notice to the other parties, be excused from such performance to the
extent of such prevention, restriction, interference or delay, provided that the
affected party shall use its commercially reasonable efforts to avoid or remove
such causes of non-performance and shall continue performance with the utmost
dispatch whenever such causes are removed. When such circumstances arise, the
parties shall discuss what, if any, modification of the terms of this Agreement
may be required in order to arrive at an equitable solution. If such an event of
force majeure suspends performance of a Research Project for more than 6 months,
either party shall be free to terminate the same without any further liability
or obligation to the other for such Research Project. If such an event of force
majeure suspends performance of this Agreement for more than 12 months, either
party shall be free to terminate this Agreement without further liability or
obligation to the other;
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provided that termination shall not affect the parties' obligations under those
provisions that by their terms survive termination or are to be performed at or
after termination.
21.13 Captions. The captions in this Agreement are for
convenience only and shall not affect the meaning of this Agreement.
21.14 Modification and Waiver. No amendment of this Agreement
or any waiver of its provisions shall be deemed to have occurred unless
expressed in a writing signed by the party to be bound.
Dated as of this 5th day of December, 1997.
AGRITOPE, INC.
By /s/ Xxxxxxx X. Xxxxxx
Title Executive Vice President
VILMORIN & CIE
By /s/ Xxxxxx Xxxxxxxx
Title C.E.O.
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EXHIBIT A
[
]*
* Bracketed material has been omitted and filed separately with the Commission
pursuant to a request for confidential treatment.
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